Corporate Tax

Arun Jaitley delivered India’s Union Budget 2015-16 today, sticking to the government’s script of encouraging increased investment from the business community. While the overall reaction has been positive, silence on the future of certain aspects of the minimum alternate tax (MAT) is one drawback for taxpayers.

The two highly competitive Asian financial hubs have announced their Budget plans for the 2015-16 fiscal year. Though frequently compared based on their size and attractiveness to global businesses, Hong Kong and Singapore’s respective Budgets conveyed disparate views on how best to attract foreign investment and stoke home-grown innovation through tax incentives.

February 28 will see the Narendra Modi government deliver its first full Budget, for 2015-16. Finance Minister Arun Jaitley’s speech has been shrouded in speculation, but taxpayers should expect incentives related to manufacturing and the ‘Make in India’ campaign, while the general anti-avoidance rule (GAAR) is likely to be deferred.

In the first of his regular monthly updates, Keith Brockman, global tax director at Mars, lecturer and author of the Strategizing Multinational Tax Risks blog, looks at why countries are enacting unilateral legislation to limit interest deductibility, the shift in focus from eliminating double taxation to eliminating non-taxation, and why, as a result, double taxation via interest limitations is here to stay.

In the last quarter of 2007, the European Commission notified Spain of its decision to open a formal investigation procedure under article 88(2) of the EC Treaty concerning the tax regime for the amortisation of financial goodwill. Jose Maria Garcia-Valdecasas Alloza, partner of Balaguer – Morera & Asociados and associate lecturer at the University of Barcelona, explores the EC’s “negative tax harmonisation”

Donald Moorehead, partner at Squire Patton Boggs in Washington, DC, assesses the prospects for action towards US tax reform in 2015, explaining that it's no surprise many are looking back at 1986 - the last time reform was achieved - for keys to unlock the process, but significant challenges remain.

With the Indian Budget fast-approaching, Subhankar Sinha, senior vice president, head of tax for the South Asia region at Siemens, looks at the tax measures that could be used to incentivise the government's 'Make in India' campaign.

Reports that the US Internal Revenue Service suspects Asian jurisdictions including Hong Kong and Singapore of making tax evasion easier has caused concern in the market, especially amid allegations that banks around the world have been helping clients evade tax. This concern has been heightened because under the terms of the Foreign Account Tax Compliance Act (FATCA), Hong Kong financial institutions are due to begin reporting to the IRS from March 31.

The UK revenue authority, HMRC, will work with the police and the Serious Fraud Office (SFO) on leaked HSBC files showing that the bank helped clients avoid tax, after coming under pressure from members of parliament (MPs).

In a strong indication of its growing commitment to enforcing tax compliance, China’s State Administration of Taxation released updated indirect transfer rules to replace Notice 698. Tax professionals say the more stringent tax rules, which include safe harbour regulations, withholding tax obligations of the buyer, and clarifications of reasonable commercial purpose, are both welcome and concerning.

As a last resort at enforcement and to reach ambitious collection goals, the Indonesian government has jailed at least eight executives and plans to send dozens more to debtors’ prison. The detainees work at five unnamed businesses that were found guilty of evading Indonesian corporate taxes totalling IDR13.6 billion ($1.07 million).

President Obama unveiled his FY 2016 Budget plan this week, seeking to replace the existing deferral system for US multinational companies and impose a minimum 19% tax on their foreign earnings, as well as charging a 14% tax on previously untaxed foreign income.

Amid collapsing oil prices, the recent 2% tax reduction for British oil exploration companies is not enough, say tax advisers and analysts. North Sea oil companies say that their ability to stay competitive in the long term will be severely shaken unless steps are taken to alleviate the tax burden.